CoreWeave shares drop after bigger than expected losses

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CoreWeave’s shares dropped as much as 11 per cent in after-hours trading on Tuesday, after the artificial intelligence data centre operator reported bigger second-quarter losses than Wall Street expected.

CoreWeave, which leases computing power to AI groups, said its net losses for the quarter were $291mn, compared to analysts’ estimates of $241mn, as the company reported earnings for the second time since its downsized initial public offering earlier this year.

The share price dip highlights investor sensitivity to any disappointing financials at CoreWeave, after shares in the company surged about 270 per cent in less than six months on the public markets.

The company has capitalised on booming demand for AI, borrowing heavily to meet huge demand for infrastructure to run generative AI models.

Revenues more than tripled year on year to $1.2bn for the three months to the end of June, above analysts’ estimates of $1.1bn.

Co-founder and chief executive Michael Intrator said demand for CoreWeave’s services surpassed its ability to build fast enough. The company’s capital expenditure reached a record $2.9bn in the quarter.

Intrator added the group had “expanded” its relationship with financial firms including Jane Street, Goldman Sachs and Morgan Stanley.

“The big banks are really starting to show up,” he said. “And they are massive consumers of compute.”

CoreWeave has grown rapidly during the AI boom over the past two years through major contracts with OpenAI and Microsoft. It has also taken on big debts to fund that growth, raising billions of dollars over the same period to build data centres.

“When we look at our pipeline, and the contracts in the pipeline we’re working on, they’re extremely significant,” Intrator said. “They will move the needle.”

As of the end of June, CoreWeave reported it has $30bn in “remaining performance obligations”, or contracts that have been secured but not fulfilled.

This week is potentially pivotal for the company, as a share lock-up will expire in the coming days allowing early investors to sell their shares for the first time since it went public in March.

Raimo Lenschow, an analyst at Barclays, said in a note that the quarter was “healthy”, but investors are waiting for the end of the share lock-up, which could cause big share price moves.

CoreWeave’s shares fell after its first quarterly results as a listed company in May, after it gave lower guidance on operating income than Wall Street had forecast at the time.

It is in the process of trying to buy competitor Core Scientific, which also rents out data centre capacity to tech groups and counts CoreWeave among its biggest customers.

One of Core Scientific’s biggest shareholders has come out against the $9bn deal, the Financial Times has reported, and is trying to rally other investors to oppose it. Investors are demanding more certainty on the offer price, which is pegged to CoreWeave’s stock without any protections if its shares fall.

Additional reporting by Tabby Kinder